Estimating Damages to Direct and Indirect Purchasers in Price-Fixing Actions

Abstract

This paper considers the measurement of damages, due to price-fixing,to both direct and indirect purchasers, focusing in particular on the importanceof pass-through - the extent to which price overcharges at the level ofproducer cartels are passed through to final consumers. We critically reviewtheoretical principles and applied techniques for measuring damages,emphasizing the leading techniques: reduced-form regression analysis andthe use of comparator benchmarks. The most common approaches to theassessment of pass-through and measurement of the consequent harm toindirect purchasers are also considered. Several important considerationsassociated with the use of regression techniques are explored, includingissues related to the interpretation of diagnostic statistics, issues of modelspecification, and the potential for specification search or data-mining bias.